Paradise Entertainment Limited inks provisional Lan Kwai Fong deal

In Macau, local casino games operator Paradise Entertainment Limited has signed a letter of intent that could see it spend up to $304.9 million in order to acquire the Lan Kwai Fong hotel and casino from current owner China Star Entertainment Limited.

Hong Kong-listed Paradise Entertainment Limited already runs machines at the nearby Casino Kam Pek Paradise and revealed that the deal will involve it taking control of China Star Entertainment Limited’s British Virgin Islands-incorporated Most Famous Enterprises Limited, Exceptional Gain Profits Limited and Charming Era Investment Limited subsidiaries and their “related shareholder loans” in order to “expand its business and to increase its market share in the gaming industry.”

“The proposed acquisition is in line with the group’s business strategies and represents a development of the group’s existing casino management service business,” read a statement from Chan Kin Man, Company Secretary for Paradise Entertainment Limited. “In addition, having its own hotel business will enable the group to directly provide hospitality services to its patrons instead of relying on hospitality services provided by other hotels to support the group’s existing casino management service business.”

Under the terms of the letter of intent, China Star Entertainment Limited has agreed not to negotiate or “solicit offers from” any other firms except Paradise Entertainment Limited in relation to the sale of the previously mentioned subsidiaries or the 209-room hotel, which also features a range of retail shops as well as a spa. The deal additionally involves a few residential units in Macau currently utilized to house Lan Kwai Fong staff and is set to expire on September 30.

“If the company proceeds with the proposed acquisition, it will enter into legally binding agreements with the seller in respect of the proposed acquisition and will make further announcements as and when appropriate in compliance with the listing rules,” read the statement from Chan.

For its part, Hong Kong-listed China Star Entertainment Limited declared that it plans to use a portion of the sale’s proceeds to assist in its already underway development of a “luxury residential and commercial complex of two towers” on an adjacent parcel of land.

“Such a development will require substantial cash resources and the group is considering to use part of the proceeds of the proposed disposal, if realized, to fund the development of such a combined site,” read a statement from China Star Entertainment Limited.